Lawrence Sports
Essay title: Lawrence Sports
Situation Analysis and Problem Statement
Lawrence Sports is an manufacturing and distribution company of sporting goods. Currently, the company is facing several situations that offer opportunities as well as problems that need to be evaluated with a critical outlook. The basis of this paper is to examine Lawrence’s’ current situation and evaluate whether there are suitable goals that can be met by the organization and its stakeholders. One can take a look at the nine-step problem-solving model presented by the University of Phoenix and come to a conclusion that will impact any situation. The nine step model includes describing the situation, framing the right problem, describing the end-state goals, identifying the alternatives, evaluating the alternatives, identifying and assessing the risks, making a decision, developing and implementing the solution, and evaluating the results. The nine-step model has proven to be an effective tool in many decision making processes, thus one will see the applied method to the Lawrence scenario below.
Situation Background (Step 1)
Lawrence Sports, further referred to as L.S. is a manufacturing and distribution company. L.S. makes and distributes equipment and protective gear for baseball, football, basketball, and volleyball. L.S. purchases its materials from Gartner Products and Murray Leather Works. L.S. also distributes 95% of its products to Mayo Stores and has revenues of $20 million. L.S. recently hired a financial manager to help with the current capitol management position.
Issue Identification
Lawrence Sports’ principle customer, Mayo Stores, is having a difficult time paying for the products on time. The current payment arrangements are that Mayo will pay 20% on purchases and 80% the following week. Being that Mayo is the principle customer at 95%, L.S. is placed into a situation where they in turn can’t pay its creditors on time. There is a plan B. Plan B is to have Central Bank do a daily loan for any amount to keep the account at $50, 000. The problem with this is that L.S. has reached the maximum amount that can be borrowed, which is $1.2 million.
Having the Central Bank loan comes with its down falls. To pay off the loan Lawrence has to come up with $1.2 million and 16% interest to bring the total to $1,392,000. The reason for the bank borrowing is that L.S. only has one major source of income and it is not enough to meet the needs of the out flows of cash. Each week L.S. needs to have ending revenues of $400,000 to maintain the $20 million a year. Working capitol management for L.S. is not an easy task. L.S. needs cash now and there are no ventures looked into at this point.
Opportunity Identification
Although there are tough issues that need to be dealt with, there are always opportunities that come from making some key decisions in an organization. Lawrence has the opportunity to increase revenues with other purchasers. L.S. can look at its current state and see that there are opportunities that need to be realized in making the minor changes in the way cash management is operated. Now would be a suitable time to explore expanding the customer base of the company.